Viva Republica, the Seoul-based fintech company behind Toss is a super app with more than 40 financial services, announced today it has raised $410 million at a post-money valuation of $7.4 billion. The new funding led by Alkeon Capital which is an American investment firm and included participation from new investors like Korea Development Bank, and returning backers Altos Ventures and Greyhound Capital.
The company plans to launch Toss Bank, a neobank, in September 2021, which is described as “the final key component” of its super app strategy. It will also use the funding to continue its expansion in overseas markets, including Vietnam, where Toss launched last year. Viva Republica hit unicorn status in 2018 and has now raised more than $940 million in equity funding.
Founder and chief executive officer SG Lee told TechCrunch that Toss Bank will focus on lending, and also offer savings accounts with competitive interest rates.
“A lot of challenger banks and non-banks are focusing on the banking experience, such as cards, so their main revenue source is interchange fees,” he said. “Toss is quite different because we already cover all that. We cover P2P payments, money transfers, cards, and all sorts of services. So we are focusing on loans, unsecured loans, mortgages, all sorts of loans. We are going to use this vehicle to give the most competitive interest rates to users, and Toss Bank will not have a separate app, since we have a super app strategy.”
One of the reasons Toss Bank is focusing on loans is because if someone has a middling credit score, many South Korean banks will only offer them loans at subprime interest rates, Lee said. Toss Bank will be able to offer better rates because its risk-scoring model leverages data from its millions of users.
Toss now claims a total of 20 million users and of that amount, 11 million are monthly active users. The app was launched as a Venmo-like peer-to-peer money transfer platform in 2015 but it was before adding more services. Now its users can turn to the app for almost all of their financial needs.